Spread Betting Technical Analysis

Technical Analysis & Spread Betting

There are two basic strategies that traders adopt for spread betting, technical analysis and trading on fundamentals.  Depending on your particular knowledge of an industry and how you plan on making money in spread betting, you may wish to use one particular strategy or another.  In this article, the spread betting strategy of technical analysis will be explained.

Technical analysis involves using previous figures, stats and information to spot trends in stocks or currency markets to predict future movements or patterns.  Generally speaking, the way a stock or market has behaved in the past tends to repeat itself, or sometimes you can spot when a specific stock has risen after a period of falling.

The use of technical analysis requires analysing charts (stocks are usually presented in candle stick form) and graphs.  Almost every good spread betting platform nowadays provides plenty of videos and tutorials on technical analysis trading.  As you improve and hone your skills in this type of analysis you will be able to make massive amounts of money predicting trends and movements in the financial markets.

Technical analysis also provides ways of determining reversal points, price targets and trends-strength.  Sometimes in stock, you can look back at recent history (a few months) and see where a trend or price reverse halted, and changed the other way.  One example from http://www.spread bettingtowin.com showed that using technical analysis on BP’s stock; you could see that the price drop reversed at the support level of around 500p.  Using this information you can speculate on the market moving upwards after the stock hits this level.

Analysing Support Levels in BP Stock

More advanced spread betting analysts suggest that while support and resistance levels are the foundations of a successful spread betting plan.  There are other far more advanced strategies that you can use, such as double tops, tripe bottoms and the flag pattern.  This involves looking for a very small consolidation patterns and then looking for a break out above or below and trading with that trend.  The advantage here is that such patterns occur far more regularly, are easier to spot, and tend to be more consistent/successful.

Technical Analysis v.s. Fundamentals

In conclusion, the majority of spread bettors stick to technical analysis over fundamentals (which involve trading on real-time externalities such as government policy over past data).  The advantage of technical analysis is that with solid information and research you can predict future trends and short-term movements.  You can also make place forward and future contracts based on how you believe the stock and that particular industry will move.  When you’re spread betting on stock over a shot span of a few hours or a day, fundamentals doesn’t really help much, since anything can happen and it’s hard to predict what exactly will happen in the future which can affect how the market pans out.

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